Video Entertainment: Slim to Zero Profits

For most tier-one service providers, video entertainment has lower profit margins than internet access or voice. The issue is how much lower. Gross margins for internet access might be in the range of 20 percent for video, 40 percent for internet access. Net margins for video might be in single digits.

For smaller service providers, video entertainment is a money-loser.

source: Geobrava
For Metronet, an overbuilder operating in Indiana and Illinois, it is literally the case that video entertainment is a “zero margin” service; a feature of a triple-play service, not a direct revenue driver.

Using what it calls a pass-thru pricing regime, Metronet says it makes video entertainment available at exactly what Metronet pays its content providers.

Under that “pass thru pricing” program, consumers are billed exactly what we pay for the television networks in your package,” Metronet says.

That means no mark-up from the actual cost of goods. “We promise that you'll pay exactly what we pay for…

What Will Drive 5G Business Model?

Among the many unknowns about 5G is the business model: where will new incremental revenue sources develop, and will they develop?
The conventional wisdom is that “enhanced” mobile broadband is one of three key revenue drivers. The others are ultra-low latency services (connected cars, for example) and massive machine applications (internet of things).
If that proves to be true, then it also is possible to say that two out of three expected revenue drivers will be enterprise markets (low latency and machine applications), while one will represent consumer mobile broadband.
And, at least at first, consumer internet access is likely to drive incremental revenue growth. The value proposition (10 times faster) is clear, and the market is large (everybody) and well understood (internet access).
And while consumer internet access will continue to be a “horizontal” value (everybody needs internet access), that might not be the case for the other two drivers. It is logical that success provid…

More 5G Spectrum Coming from U.S. FCC

The Federal Communications Commission will vote in November 2017 to make available 1,700 MHz of high-frequency spectrum for 5G.
Two spectrum bands will be allocated,  providing 700 MHz in the 24 GHz band and 1 GHz in the 47 GHz band.
A year ago, the FCC allocated 11.65 GHz of spectrum with 3.85 GHz of that allocated in the 28 GHz and 37 GHz to 40 GHz bands.  Additional spectrum is still under consideration to be allocated in the future.
All that new spectrum, plus spectrum sharing and spectrum aggregation, will lead to mobile internet access becoming very price-competitive with fixed internet access, for many users and use cases.
Some might still doubt that 5G will create, for the first time, full product substitution by mobile networks for fixed network internet access. Traditionally, the objections were well founded, and based on value and price objections.
Mobile traditionally has been much slower than fixed, and cost per bit has been at least an order of magnitude higher for mobile …

Why Gigabit Mobile Matters

Though retail pricing is an issue, mobile network peak data rates above the gigabit-per-second barrier are important because it brings “a mobile user experience that at least matches the home fixed broadband experience,” according to Nokia.

In other words, the value is not so much “gigabit speeds for smartphones,” but the ability of mobile networks to rival fixed network user experience. That, in turn, matters for several reasons.
In markets where mobile provides nearly all the internet access, gigabit peak rates mean typical user experiences in developing markets that are substantially on a par with developed markets.
In developed markets, gigabit mobile rates mean both the ability to create a full substitute product for fixed access, as well as the ability to serve many locations where the business case for a fixed solution at such speeds is unworkable.
For fixed service providers, gigabit mobility therefore also calls into question the value and business model fo…

Auto Industry Mirrors Telecom Industry Transition

Eventually, the auto industry will make vehicles as the foundation of a range of other revenue-generating activities, but not as the sole driver of revenue, much as the telecom industry is in transition to business models that are built on the need for connectivity, but not connectivity revenue itself.
It is easy to forget that whole industries, not just products created by any industry, have product life cycles. Now it is the auto industry as a whole that seems to have reached a peak of its life cycle, something we already have seen in the telecom industry regarding voice and messaging products, might be seeing in mobility and video entertainment as well, and will soon affect internet access.
source: Marketing Fanatics
With the caveat that global trends sometimes are not reflected in some particular markets, Moody’s Investors Service says the global auto industry outlook is negative, with “stagnant or falling demand for vehicles, a shift back to larger vehicles despite new energy effi…

AI in Telecom: Customer Service is an Early Use Case

As was the case for cloud computing, so artificial intelligence is going to appear in consumer-facing apps where the user is not always aware of its presence. Voice interfaces provide the best example.
That also seems to be the case in telecommunications as well. But AI also is expected to play a growing role in network operations as well.
The most-popular AI applications in use by a number of tier-one U.S. telcos include customer service apps such as chat bots. In those roles, AI-assisted apps automate customer service inquiries, route customers to the proper agent, and send prospects with buying intent directly to sales people, according to Tech Emergence.
Those use cases also are obvious in the area of speech and voice services for customers, allowing customers to explore or purchase media content by spoken word rather than some other method.
In the network, AI is starting to be used for predictive maintenance, allowing staffs to fix problems with telecom hardware (cell towers, powe…

Will Autonomous Vehicles Increase or Decrease Traffic?

You might think significant use of autonomous vehicles would increase--or at least not affect--primary reliance on public transportation. You might also guess that use of autonomous vehicles would reduce use of traditional taxis.
A study conducted by Boston Consulting Group suggests the former would not happen, while the latter would. The study looked at existing and expected traffic patterns in downtown Boston.
source: Boston Consulting Group
The risk of unintended consequences arguably is substantial. If autonomous vehicles make transportation  cheaper and more convenient, traffic congestion could increase.
If people use autonomous vehicles more often and in an ad hoc manner, more congestion could result.
Greater congestion could also result from a rise in certain types of zero-occupancy trips, such as when empty autonomous vehicles cruise the streets to sautonomous vehiclee on the costs of parking.
The base case assumes that 56 percent of the trips start, end or occur entirely within…